Gray area, Blob When close to terrain

So, i have no idea how this happened but i must had toggled something and now it makes it impossible almost to pain my terrain as this gray blob thing keeps on following under me wherever i go. If i scroll far away from the terrain it does not show, when i get close it does. If i get close to anything on the the terrain it simply covers that area in gray color. Any idea what this is and how to fix it?

My assumption given the image, is that it is your skybox/background colour, and you are having some issues with scaling/clipping planes on the camera such that the object is clipping when you get too close. Try zooming out and middle clicking somewhere on the terrain.